On November 7, 2016 Progenics Pharmaceuticals, Inc. (Nasdaq:PGNX) reported financial results for the third quarter 2016 and business update (Press release, Progenics Pharmaceuticals, NOV 7, 2016, View Source [SID1234516354]).

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"In recent months, we have realized $100 million in non-dilutive funding from RELISTOR, first with the $50M RELISTOR oral approval milestone in July, followed by the $50 million of proceeds from the non-recourse loan secured by future RELISTOR royalties announced today," said Mark Baker, Chief Executive Officer of Progenics. "With our strong balance sheet, we have the resources to advance our programs through key milestones. We expect to report registrational topline data, in early 2017, for our ultra-orphan radiotherapeutic candidate AZEDRA, for the treatment of pheochromocytoma and paraganglioma, rare tumors of the adrenal gland, and are beginning to build our commercial infrastructure to support a potential launch. In addition, we are continuing to advance our innovative portfolio of imaging agents and therapeutic candidates which have the potential to transform how we find, fight and follow prostate cancer."

Key Business Highlights

RELISTOR, treatment for opioid-induced constipation (partnered with Valeant Pharmaceuticals International, Inc.)

Announced Food and Drug Administration (FDA) Approval and Commercial Launch of Oral RELISTOR for the Treatment of Opioid Induced Constipation in Adults with Chronic Non-Cancer Pain. The approval triggered a $50 million milestone payment on July 25 from Progenics’ commercialization partner, Valeant, as well as subsequent royalties and the potential of up to $200 million in sales milestones.

RELISTOR (SC and Oral) Net Sales for the Third of 2016 Totaled $22.1 million. The third quarter 2016 sales, as reported to Progenics by Valeant, translated to $3.3 million in royalty revenue for the quarter.
AZEDRA, Ultra-orphan radiotherapeutic candidate

AZEDRA Topline Results Expected First Quarter 2017. In early 2017, Progenics expects to report topline results from its ongoing registrational trial of AZEDRA. If the AZEDRA trial meets the endpoints of the Special Protocol Assessment (SPA), Progenics expects to submit a New Drug Application (NDA) to the FDA during the first half of 2017.
PSMA-Targeted Prostate Cancer Pipeline

Enrollment in Pivotal Phase 3 Study of 1404 is Ongoing. The study will enroll up to 450 patients with newly-diagnosed or low-grade prostate cancer who are candidates for active surveillance. Progenics plans for an interim analysis by the end of this year, to assess futility and evaluate the need for a sample size re-estimation, remain unchanged.

On Track to Initiate Phase 2/3 Trial of PyL Imaging Agent. Progenics remains on-track to initiate a Phase 2/3 trial of PyL by year-end. The study is designed to assess the diagnostic accuracy of PyL PET/CT imaging in patients with high risk and/or metastatic prostate cancer.

PyL Research Access ProgramTM. At the recent Prostate Cancer Foundation Scientific Retreat, Progenics announced a new PyL research access program that will make limited doses of PyL available to researchers beginning January 1, 2017. Progenics will be able to use the data generated from the access program to support its registration efforts for PyL and advance the development of algorithms designed to analyze and interpret the scans.

Company Remains On-Track to Initiate a Phase 1 Trial of 1095 in the Fourth Quarter of 2016. The Phase 1 Study of 1095, a PSMA-Targeted Therapeutic for Metastatic Prostate Cancer, will be conducted at Memorial Sloan Kettering Cancer Center.
Corporate

Announced $50 Million RELISTOR Royalty-Backed Non-Dilutive Debt Financing with HealthCare Royalty Partners. In a separate press release issued today, Progenics announced that it has entered into a $50 million non-recourse, term loan agreement secured by and to be repaid from royalties on future sales of RELISTOR. Any future sales milestones received under Valeant agreement are excluded from the transaction and would not be used to repay interest or principal on the loan. Progenics and HealthCare Royalty Partners may mutually elect to include a second tranche of an additional $50 million within twelve months of the closing date.

Appointed Biopharmaceutical Industry Veteran Bryce V. Tenbarge as Vice President of Commercial. Mr. Tenbarge brings to Progenics over fifteen years of experience in biopharmaceutical marketing, most recently as Vice President of Marketing and Commercialization at Celldex Therapeutics.
Third Quarter 2016 Financial Results

Third quarter revenue totaled $53.9 million, up from $1.4 million in the third quarter of 2015, reflecting RELISTOR royalty income of $3.3 million compared to $1.2 million in the corresponding period of 2015. Valeant’s reported net sales include a non-recurring favorable sales return adjustment and launch of oral RELISTOR. The increase in revenue was primarily attributable to milestone revenue of $50 million for the July 19 approval of RELISTOR Tablets.

Third quarter and year-to-date research and development expenses increased by $2.8 million and $6.7 million, respectively, compared to the corresponding prior year periods, resulting from higher clinical trial and contract manufacturing expenses for 1404, AZEDRA, PyL and 1095. Third quarter general and administrative expenses increased by $2.6 million compared to the corresponding prior year period, primarily attributable to an accrual for front pay compensation related to litigation with a former employee, and higher consulting and market research expenses. Year-to-date general and administrative expenses increased by $4.2 million compared to the corresponding period in 2015, primarily due to higher depreciation expense as a result of a reduction in the remaining useful lives of our leasehold improvements at our Tarrytown, NY location, and higher compensation, consulting and market research expenses. Progenics also recorded a non-cash charge of $0.6 million in the third quarter related to an increase in the fair value estimate of the contingent consideration liability.

Net income attributable to Progenics for the quarter was $36.3 million or $0.52 per diluted share, compared to a net loss of $10.0 million or $0.14 per diluted share in the corresponding 2015 period. Progenics ended the quarter with cash and cash equivalents of $98.9 million, an increase of $24.8 million compared to cash and cash equivalents as of December 31, 2015.

On November 7, 2016 Halozyme Therapeutics, Inc. (NASDAQ: HALO) reported financial results and recent highlights for the third quarter ended September 30 (Press release, Halozyme, NOV 7, 2016, View Source [SID1234516388]).

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"The third quarter was highlighted by Genentech’s BLA filing for rituximab in a subcutaneous formulation using Halozyme’s ENHANZE platform in multiple blood cancers, a development that adds to the potential for our royalty revenue and highlights the benefits of our business model," said Dr. Helen Torley, president and chief executive officer. "In our oncology pillar, we continued initiation of our global sites in our phase 3 study of PEGPH20 and are making progress toward dose expansion in our study with Keytruda, all as we anticipate reporting topline results from stage 2 of our HALO-202 study once the data is mature."

Halozyme was recently informed by the independent statistician for the data monitoring committee of its HALO-202 study that progression-free survival data are not yet mature for analysis. As a result, the company now expects the reporting of data may move into 2017, depending on when it is mature for analysis.

Third Quarter 2016 and Recent Highlights include:

The inclusion of PEGPH20 in the Pancreatic Cancer Action Network’s Precision Promise initiative, a broad industry and pancreatic cancer community coalition established to study pancreatic cancer therapies in patients based on the molecular profile of their tumors. The clinical trial plans to enroll patients at 12 consortium sites in the U.S. beginning in spring 2017.
Continuing to initiate sites in the HALO-301 | Pancreatic study toward the goal of having approximately 90 percent of centers ready to screen patients by the end of 2016.
Progressing in dose escalation of the ongoing phase 1b clinical study evaluating PEGPH20 in combination with KEYTRUDA (pembrolizumab) in relapsed non-small cell lung and gastric cancer patients. The company continues to project that the study will move to the dose expansion phase by the end of 2016.
U.S. Food and Drug Administration (FDA) filing a Biologics License Application (BLA) to support approval for the subcutaneous formulation of Rituximab in multiple blood cancer indications. Including all approved indications, Roche reported total 2015 sales of rituximab in the United States of 3.76 billion CHF.
Pfizer announcing discontinuation of the global clinical development program for bococizumab, its investigational PCSK9 inhibitor. The development of a subcutaneous version on the Halozyme ENHANZE platform has also been discontinued. Pfizer also made a portfolio decision to discontinue development of rivipansel with the ENHANZE platform even though the technology performed as intended. Pfizer continues to develop an additional program with the ENHANZE platform for an undisclosed target.
Third Quarter 2016 Financial Highlights

Revenue for the third quarter was $31.9 million compared to $20.8 million for the third quarter of 2015, driven primarily by royalties from partner sales of Herceptin SC, MabThera SC and HYQVIA, API sales to partners, and manufacturing and clinical supply reimbursements from ENHANZE partners.
Revenue for the third quarter included $13 million in royalties, an increase of 58 percent from the prior-year period, $9.6 million in sales of bulk rHuPH20 primarily for use in manufacturing collaboration products and $3.7 million in HYLENEX recombinant (hyaluronidase human injection) product sales.
Research and development expenses for the third quarter were $33.9 million, compared to $27.6 million for the third quarter of 2015. The planned increases were primarily due to a ramp in spending associated with the HALO-301 study, personnel expenses, and manufacturing and clinical supply expenses that are reimbursed by ENHANZE partners.
Selling, general and administrative expenses for the third quarter were $11.6 million, compared to $10.2 million for the third quarter of 2015. The increase was primarily due to personnel expenses, including stock compensation, for the period.
Net loss for the third quarter was $28.9 million, or $0.23 per share, compared to a net loss in the third quarter of 2015 of $24.5 million, or $0.19 per share.
Cash, cash equivalents and marketable securities were $221.1 million at September 30 compared to $230 million at June 30, 2016.
Financial Outlook for 2016

For the full year 2016, the company updated and narrowed its financial guidance, now expecting:

Net revenue of $145 million to $150 million, raising the lower end of its prior $140 million to $150 million range;
Operating expenses of $240 million to $245 million, from the prior $245 million to $260 million range;
Cash flow of $75 million to $85 million, from the prior range of $65 million to $85 million;
Year-end cash balance of $180 million to $190 million, raising the lower end of its prior $170 million to $190 million range.
– See more at: View Source#sthash.RNuqhBMu.dpuf

On November 7, 2016 Horizon Pharma plc (NASDAQ: HZNP), a biopharmaceutical company focused on improving patients’ lives by identifying, developing, acquiring and commercializing differentiated and accessible medicines that address unmet medical needs, reported its third-quarter 2016 financial results today and confirmed its full-year 2016 GAAP net sales, non-GAAP adjusted net sales and adjusted EBITDA guidance, as updated on October 25, 2016, following the completion of the acquisition of Raptor Pharmaceutical Corp (Press release, Horizon Pharma, NOV 7, 2016, View Source [SID1234516657]).

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"We delivered strong results in the third quarter as we continued to execute on our long-term strategy of building a more-diversified, sustainable biopharmaceutical company anchored by a growing mix of orphan medicines," said Timothy P. Walbert, chairman, president and chief executive officer, Horizon Pharma plc. "We have made several strategic decisions this year to put Horizon Pharma on a strong path forward, including securing formulary status with two major PBMs for our primary care medicines and completing two significant acquisitions in rare diseases."
Financial Highlights

(in millions except for per
share amounts and
percentages) Q3 16 Q3 15 %
Change YTD 16 YTD 15 %
Change
Net sales (1)
$ 208.7 $ 226.5 (8 ) $ 670.8 $ 512.5 31
Non-GAAP adjusted net sales (1)
273.7 226.5 21 735.8 512.5 44
Net (loss) income
(5.9 ) 3.3 NM (36.3 ) 15.5 NM
Non-GAAP net income
115.5 69.8 65 248.1 151.4 64
Adjusted EBITDA
141.2 131.1 8 334.3 239.7 39
Loss (earnings) per share – diluted
(0.04 ) 0.02 NM (0.23 ) 0.10 NM
Non-GAAP earnings per share – diluted
0.70 0.42 67 1.51 0.98 54

(1) On Sept. 26, 2016, Horizon Pharma agreed to pay Express Scripts $65 million as part of a litigation settlement, which was recorded as a one-time reduction to GAAP net sales for the three and nine months ended Sept. 30, 2016, in accordance with U.S. Generally Accepted Accounting Principles (GAAP). The exclusion of the $65 million settlement from GAAP net sales is the only adjustment reflected in third-quarter and year-to-date non-GAAP adjusted net sales.

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Company Highlights

● Third-quarter 2016 GAAP net sales, including the previously announced $65 million litigation settlement with Express Scripts as a one-time reduction, were $208.7 million, a decrease of 8 percent compared to the third quarter of 2015, primarily attributable to the settlement. Non-GAAP adjusted net sales excluding the $65 million settlement were $273.7 million, an increase of 21 percent compared to the third quarter of 2015, driven by growth across each of the Company’s business units: Orphan, Rheumatology and Primary Care.

● Medicines for rare diseases, which include RAVICTI , ACTIMMUNE , KRYSTEXXA and BUPHENYL , represented 35 percent of total non-GAAP adjusted net sales in the third quarter of 2016, an increase from 29 percent of total net sales in the third quarter of 2015.

● Third-quarter 2016 GAAP net loss was $5.9 million or a diluted loss per share of $0.04; and non-GAAP net income was $115.5 million or non-GAAP diluted earnings per share of $0.70.

● On October 25, 2016, Horizon Pharma completed the acquisition of Raptor Pharmaceutical Corp., which was a significant step in advancing the Company’s strategy to expand its rare disease business with the addition of two orphan medicines, PROCYSBI (cysteamine bitartrate) delayed-release capsules and QUINSAIR (aerosolized form of levofloxacin). More than half of the Company’s medicines now treat patients with rare diseases.

● To provide long-term durability for its primary care medicines, the Company has secured formulary status with two leading Pharmacy Benefit Managers (PBMs) that represent approximately 35 percent of covered lives in the United States. The Company remains in active discussions and negotiations with other PBMs and payers with the goal of further increasing access to its medicines. The Company is investing in the expansion of its managed care organization to support its broader contracting strategy with PBMs and payers.

● The Company will present data on both KRYSTEXXA and RAYOS at the upcoming American College of Rheumatology meeting November 11-16, 2016, in Washington D.C. This is the first medical meeting in three years where KRYSTEXXA will have a significant clinical and commercial presence, which will continue to expand the awareness of KRYSTEXXA as an important treatment option for refractory chronic gout patients.
Horizon Pharma Confirms 2016 Full-Year Guidance

● Confirmed full-year 2016 net sales guidance on a GAAP basis of approximately $980 to $985 million, which includes the previously announced $65 million settlement with Express Scripts as a one-time reduction and includes the acquisition of Raptor Pharmaceutical Corp. Confirmed net sales guidance on a non-GAAP adjusted basis of approximately $1.045 to $1.050 billion, which excludes the $65 million settlement with Express Scripts.

● Confirmed full-year 2016 adjusted EBITDA guidance of $450 to $460 million, which includes the acquisition of Raptor Pharmaceutical Corp.

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Third-Quarter Business Unit Net Sales Results

(in millions except for percentages) Q3 16 Q3 15 %
Change YTD 16 YTD 15 %
Change
Orphan
$ 71.4 $ 66.1 8 $ 211.2 $ 139.6 51
RAVICTI (1)
42.2 33.4 26 118.6 52.4 126
ACTIMMUNE
24.9 28.7 (13 ) 80.5 79.4 1
BUPHENYL (1)
4.3 4.0 10 12.1 7.8 55
Rheumatology
40.5 12.8 217 101.0 31.7 219
KRYSTEXXA (2)
25.6 - NM 61.6 - NM
RAYOS
13.4 11.7 15 36.0 29.2 24
LODOTRA
1.5 1.1 37 3.4 2.5 35
Primary Care
161.8 147.6 10 423.6 341.2 24
PENNSAID 2%
80.2 43.9 83 207.9 91.6 127
DUEXIS
47.6 56.9 (16 ) 122.8 130.0 (6 )
VIMOVO
32.8 46.8 (30 ) 89.7 119.6 (25 )
MIGERGOT (2)
1.2 - NM 3.2 - NM
Litigation settlement (3)
(65.0 ) - NM (65.0 ) - NM

Total GAAP net sales (3)
$ 208.7 $ 226.5 (8 ) $ 670.8 $ 512.5 31

Total non-GAAP adjusted net sales (3)
$ 273.7 $ 226.5 21 $ 735.8 $ 512.5 44

(1) RAVICTI and BUPHENYL were acquired on May 7, 2015.
(2) KRYSTEXXA and MIGERGOT were acquired on January 13, 2016.
(3) On Sept. 26, 2016, Horizon Pharma agreed to pay Express Scripts $65 million as part of a litigation settlement, which was recorded as a one-time reduction to GAAP net sales for the three and nine months ended Sept. 30, 2016, in accordance with U.S. GAAP. The exclusion of the $65 million settlement from GAAP net sales is the only adjustment reflected in third-quarter and year-to-date non-GAAP adjusted net sales.

● Orphan Business Unit: RAVICTI sales in the third quarter of 2016 were $42.2 million, an increase of 26 percent compared to the third quarter of 2015. RAVICTI was launched in Canada in the fourth quarter of 2016. ACTIMMUNE sales in the third quarter of 2016 were $24.9 million. Following the acquisition of Raptor Pharmaceutical Corp. on October 25, 2016, the Company added to its Orphan Business Unit PROCYSBI for the treatment of nephropathic cystinosis, a rare metabolic disorder, and QUINSAIR for the management of chronic pulmonary infections for patients with cystic fibrosis. QUINSAIR is not approved in the United States.
ACTIMMUNE Phase 3 Trial in Friedreich’s ataxia and Phase 1 Trial in Oncology
In its pipeline, the Company continues to expect topline data in late December from the Safety, Tolerability and Efficacy of ACTIMMUNE Dose Escalation in FA (STEADFAST) Phase 3 clinical trial. There are an estimated 3,700 diagnosed patients in the United States with Friedreich’s ataxia (FA) and the Company believes an indication for ACTIMMUNE in FA, if approved, could represent a $500 million to $1 billion peak annual net sales opportunity. In the Phase 1 dosing trial evaluating ACTIMMUNE as a combination therapy for certain cancers, the first six-patient cohort was completed in May, the second six-patient cohort was completed in September, and the third six-patient cohort is now enrolling.

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● Rheumatology Business Unit: KRYSTEXXA sales in the third quarter of 2016 were $25.6 million, an increase of 29 percent sequentially compared to the second quarter of 2016. KRYSTEXXA patient infusions and benefit investigations, which are the leading indicator of new patient starts, continue to increase and the Company is investing in additional commercial support, education and outreach efforts to accelerate growth. RAYOS sales in the third quarter of 2016 were $13.4 million, an increase of 15 percent compared to the third quarter of 2015.

● Primary Care Business Unit: Total sales growth for the primary care business unit increased approximately 10 percent compared to the third quarter of 2015, driven by strong performance of PENNSAID 2%. Sales of PENNSAID 2% in the third quarter of 2016 were $80.2 million, an increase of 83 percent compared to the third quarter of 2015. DUEXIS and VIMOVO sales in the third quarter of 2016 were $47.6 million and $32.8 million, respectively.
Third-Quarter 2016 Financial Results
Note: For additional detail and reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, please refer to the tables at the end of this release.

● Gross Profit: Under U.S. GAAP in the third quarter of 2016, the gross profit ratio was 59.2 percent compared to 73.0 percent in the third quarter of 2015. The non-GAAP gross profit ratio in the third quarter of 2016 was 91.6 percent compared to 92.1 percent in the third quarter of 2015.

● Operating Expenses: On a GAAP basis in the third quarter of 2016, total operating expenses were 69.4 percent of GAAP net sales. Research & development (R&D) expenses were 6.1 percent of GAAP net sales, sales & marketing (S&M) expenses were 34.8 percent of GAAP net sales and general & administrative (G&A) expenses were 28.5 percent of GAAP net sales. Non-GAAP total operating expenses in the third quarter of 2016 were 39.9 percent of non-GAAP adjusted net sales. Non-GAAP R&D expenses were 3.8 percent of non-GAAP adjusted net sales, non-GAAP S&M expenses were 24.0 percent of non-GAAP adjusted net sales, and non-GAAP G&A expenses were 12.1 percent of non-GAAP adjusted net sales.

● Income Tax Rate: The income tax rate in the third quarter of 2016 on a GAAP basis was 82.5 percent and on a non-GAAP basis was 9.0 percent. The income tax rate for the first nine months of 2016 on a GAAP basis was 46.8 percent and on a non-GAAP basis was 14.6 percent.

● Net (Loss) Income: On a GAAP basis in the third quarter of 2016, net loss was $5.9 million and non-GAAP adjusted net income was $115.5 million.

● EBITDA: In the third quarter of 2016, EBITDA was $58.2 million, or 27.9 percent of GAAP net sales. Adjusted EBITDA in the third quarter of 2016 was $141.2 million, or 51.6 percent of non-GAAP adjusted net sales, compared to $131.1 million, or 57.9 percent of net sales in the third quarter of 2015.

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● (Loss) Earnings per Share: On a GAAP basis in the third quarter of 2016, diluted loss per share was $0.04 and in the third quarter of 2015, diluted earnings per share was $0.02. Non-GAAP diluted earnings per share in the third quarter of 2016 and 2015 were $0.70 and $0.42, respectively, representing growth of 66.7 percent. Weighted average shares outstanding used for calculating GAAP diluted loss per share and non-GAAP diluted earnings per share in the third quarter of 2016 were 161.0 million and 164.9 million, respectively.
Cash Flow Statement and Balance Sheet Highlights

● On a GAAP basis in the third quarter of 2016, operating cash flow was $128.8 million. Non-GAAP operating cash flow was $133.8 million in the third quarter of 2016. On a GAAP basis, operating cash flow in the first nine months of 2016 was $230.3 million compared to operating cash flow in the first nine months of 2015 of $59.2 million. On a non-GAAP basis, operating cash flow in the first nine months of 2016 was $259.8 million compared to operating cash flow in the first nine months of 2015 of $167.2 million.

● The Company had cash and cash equivalents of $549.3 million as of September 30, 2016. Cash and cash equivalents as of June 30, 2016 were $424.5 million.

● Total principal amount of debt outstanding was $1.270 billion as of September 30, 2016, which was composed of $395 million in senior secured term loans due 2021, $475 million in 6.625 percent senior notes due 2023, and $400 million of 2.5 percent exchangeable senior notes due 2022. Net debt at September 30, 2016 was $721 million.
On October 25, 2016, the Company completed a private offering of senior notes and borrowed incremental term loans under its existing senior secured credit facility to partially fund the acquisition of Raptor Pharmaceutical Corp., repay Raptor’s debt and pay related fees and expenses. Following the issuance of this new debt, the new total principal amount of debt outstanding is $1.945 billion, which is composed of $770 million in senior secured term loans due 2021; $475 million in 6.625 percent senior notes due 2023, $300 million in 8.75 percent senior notes due 2024, and $400 million of 2.5 percent exchangeable senior notes due 2022.

On November 7, 2016 SignalRx Pharmaceuticals Inc., a clinical-stage company focused on developing more effective oncology drugs with designed multiple target-selected inhibition profiles, reported the publication of key research supporting the use of its clinical stage drug SF1126 alone and in combination with Sorafinib for the treatment of hepatocellular carcinoma (HCC) (Press release, SignalRx, NOV 7, 2016, http://www.ireachcontent.com/news-releases/signalrx-announces-publication-of-research-results-on-sf1126-as-a-first-in-class-dual-pi3kbrd4-inhibitor-for-treating-hcc-600328031.html [SID1234517420]). The research was published in the November issue of Molecular Cancer Therapeutics journal from the American Association for Cancer Research (AACR) (Free AACR Whitepaper) (Mol Cancer Ther November 1 2016 15 (11) 2553-2562; DOI:10.1158/1535-7163.MCT-15-0976).

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Researchers at the University of California, San Diego School of Medicine and Moores Cancer Center, led by Dr. Donald Durden, Professor and Associate Director of Pediatric Oncology and senior scientific advisor for SignalRx, report results supporting the use of SF1126 as a novel therapeutic agent for the treatment of hepatocellular carcinoma (HCC), the most common kind of liver cancer and second most common cause of cancer death worldwide.

SF1126 is an anticancer agent shown to have an excellent therapeutic window with excellent tolerability and safety in Phase I clinical trials (Clinicaltrials.gov: NCT00907205). While most anti-cancer drugs only interact with a single cancer target, SF1126 inhibits two key cancer signaling molecules in liver cancer cells, phosphatidylinositol 3-kinase (PI3K) and bromodomain-containing 4 (BRD4). SF1126 represents a "first in class" approach to treat liver cancer by hitting two central signaling nodes of the liver cancer cell with only one therapeutic agent. The published work shows that this novel strategy kills liver cancer cells and prevents the growth of liver cancer tumors in mice.

Targeting two pathways with one drug can provide a significant therapeutic advantage since this approach also reduces the risk of severe "off-target" side effects resulting from the combination of side effects associated to each of the multiple drugs used. The treatment of HCC remains a challenge with Sorafenib as the only FDA-approved drug for liver cancer since it prolongs life for an average of only 2-3 months and can have significant side effects. Work from the Durden laboratory shows that using SF1126 with Sorafenib provides a dramatically improved anticancer effect by killing liver cancer cells in synergy.

In HCC, the deregulation of the PI3K/AKT/mTOR, Ras/Raf/MAPK and c-Myc signaling pathways are of prognostic significance. While Sorafenib blocks the Ras/Raf/MAPK pathway, it does not inhibit the PI3K/AKT/mTOR pathway or c-Myc activation. SF1126 controls c-Myc by inhibiting BRD4, which results in blockage of c-Myc production, and by inhibiting PI3K, which leads to enhanced c-Myc degradation. Hence, a combination of SF1126 with Sorafenib offers a new mechanism-driven mode of action to inhibit/treat HCC.

In particular, the research results published in Molecular Cancer Therapeutics demonstrate that:

SF1126 (pan PI3K/BRD4 inhibitor), as a single agent or in combination with Sorafenib, inhibits cancer cell proliferation (Hep 3B, Hep G2, SK-Hep1 and Huh7 HCC cell lines) by effectively inhibiting the PI3K/AKT/mTOR and Ras/Raf/MAPK pathways.
SF1126’s active moiety LY294002 binds to and blocks BRD4 interaction with the acetylated histone-H4 chromatin mark protein and displaces the BRD4 co-activator protein from the transcriptional start site of MYC in Huh7 and SK-Hep-1 HCC cell lines.
SF1126 blocks expression of c-Myc in HCC cells.
SF1126, either alone or in combination with Sorafenib, shows significant antitumor activity in vivo.
These published results establish SF1126 as a dual PI3K/BRD4 inhibitor and the first epigenetic/kinase inhibitor in the clinic. SF1126 has completed a Phase I clinical trial in humans with good safety profile, has received Orphan Drug Designation by the FDA, and is currently in a pediatric Phase I clinical trial in children with neuroblastoma.

Taken together, this published data strongly warrants additional clinical trials of SF1126 in advanced HCC as well as a combination Phase I trial with Sorafenib.

SignalRx is seeking partners for the clinical development of SF1126 as well as the acceleration of the company’s preclinical pipeline with novel and proprietary nM potent small molecules into first-in-man clinical trials.

SignalRx’s novel dual inhibitors have a unique competitive advantage over combining separate agents in cancers where lethality requires simultaneous target inhibition for maximal effect with minimal side-effects. Because it provides a single pharmacodynamics profile the dual inhibition in a single molecule approach provides the optimal way to effect simultaneous target inhibition with significantly less toxicity than combinations of inhibitors.

On November 7, 2016 MorphoSys AG (FSE: MOR; Prime Standard Segment; TecDAX, OTC: MPSYY) reported its financial results for the first nine months of 2016, and outlined the key events for the third quarter ending September 30, 2016 (Press release, MorphoSys, NOV 6, 2016, View Source [SID1234516664]).

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Financial results for the first nine months of 2016

For first nine months of 2016, group revenues totaled EUR 36.7 million and EBIT amounted to EUR -32.3 million. Previous year’s figures included a non-recurring effect of approximately EUR 59 million (9-months 2015 revenues: EUR 93.9 million; 9-months 2015 EBIT: EUR 34.7 million).
Adjusted for last year’s one-off effect, 9-months group revenues rose by 5% year-on-year.
The Group’s liquidity position on September 30, 2016 amounted to EUR 267.2 million (December 31, 2015: EUR 298.4 million).
The Company confirms its 2016 guidance for revenues in the range of EUR 47 million to EUR 52 million and EBIT between EUR -58 million and EUR -68 million.
Operating highlights of the third quarter of 2016

In early August, MorphoSys announced the successful completion of the safety run-in of its phase 2 clinical trial of MOR208 in combination with lenalidomide in patients with relapsed or refractory diffuse large B cell lymphoma (DLBCL) (L-MIND trial).
At the beginning of September, MorphoSys disclosed that the first patient had been dosed in the safety run-in of a phase 2/3 combination trial of MOR208 with bendamustine. The B-MIND trial will evaluate the safety and efficacy of MOR208 combined with the chemotherapeutic agent bendamustine in comparison to rituximab plus bendamustine. The study is expected to transition into a pivotal phase 3 part in 2017.
At the end of September, MorphoSys and its Belgian development partner Galapagos NV announced that the first patient with atopic dermatitis was dosed in an ongoing phase 1 trial of MOR106 against IL-17C after the antibody showed favorable safety in healthy volunteers.
In early July, MorphoSys disclosed the receipt of a milestone payment from Novartis, which was recognized in the second quarter of 2016. This payment was triggered by the initiation of a phase 1 clinical study of a novel HuCAL antibody for the prevention of thrombosis.
In September, the Company announced the appointment of four experts to its newly formed Scientific Advisory Board. This international panel of scientific experts was established to advise the Company on the strategic options and future perspectives within its research and development activities.
In September, MorphoSys’s Dutch subsidiary Lanthio Pharma B.V., which specializes in the development of lanthipeptides, announced the appointment of Axel Mescheder, M.D. as its Chief Medical Officer.
In mid-October, the Company announced the receipt of a milestone payment from Novartis, which was booked in the third quarter of 2016. The payment was triggered by the start of a phase 1 clinical trial with a novel HuCAL antibody in the field of cancer.
At the end of the third quarter, MorphoSys’s pipeline comprised an all-time high of 110 therapeutic programs, 28 of which are in clinical development.
Key events after the end of the third quarter of 2016

On October 1, 2016, MorphoSys announced that its licensee Janssen Research & Development, LLC (Janssen) reported positive results from a phase 3 clinical study of guselkumab in 837 patients with moderate to severe plaque psoriasis ("VOYAGE 1" study). Guselkumab is a fully human antibody targeting IL-23 which was selected from MorphoSys’s HuCAL antibody library. According to Janssen, both co-primary endpoints were met. Janssen also reported that all major secondary endpoints achieved statistical significance in comparisons of guselkumab versus adalimumab (Humira). Following the positive study results, Janssen announced plans to apply for regulatory approval in 2016. Guselkumab is expected to be the first HuCAL antibody to reach the market.

In EURO million* 9-Months 2016 9-Months 2015


Group Revenues 36.7 93.9
Total Operating Expenses 69.1 63.6
Other Income/Expenses 0.1 4.5
Earnings Before Interest and Taxes – EBIT (32.3) 34.7
Consolidated Net Profit / (Loss) (31.6) 28.2
Total EPS, diluted, in EURO (1.21) 1.07

* Differences due to rounding

"We are excited about the phase 3 data in moderate-to-severe psoriasis that our partner Janssen has generated with guselkumab. This could become the first product based on our proprietary technology to reach the market," commented Dr. Simon Moroney, Chief Executive Officer of MorphoSys AG. "Our therapeutic pipeline is progressing well, now with 110 programs in development, more than ever before, of which 28 are in clinical studies."

"With the results shown for the first nine months of 2016 we are on track to meet our targets for the full year," stated Jens Holstein, Chief Financial Officer of MorphoSys AG. "Based on our solid financial situation with liquidity of EUR 267.2 million at the end of the third quarter, MorphoSys will continue to invest in our promising development candidates from a position of strength."

Financial Review of the First Nine Months of 2016 (IFRS)

Group revenues in the first nine months of 2016 amounted to EUR 36.7 million, compared to EUR 93.9 million in the first nine months of 2015. The main reason for the decline compared to the previous year period is a non-recurring effect of about EUR 59 million in 2015 in connection with the termination of the collaboration with Celgene for MOR202. Adjusted for last year’s one-off effect, revenues for the first nine months rose by 5%.

The Proprietary Development segment recorded revenues of EUR 0.5 million (9-months 2015: EUR 59.9 million). Revenues in the Partnered Discovery segment reached EUR 36.2 million (9-months 2015: EUR 34.0 million). Success-based payments amounted to about 10% of total revenues, or EUR 3.5 million (9-months 2015: 3% or EUR 2.5 million).

Total operating expenses for the first nine months of 2016 amounted to EUR 69.1 million (9-months 2015: EUR 63.6 million). Total research and development expenses were EUR 58.8 million (9-months 2015: EUR 53.1 million). The increase is mainly due to intensified clinical development activities with MorphoSys’s proprietary antibody candidates, in particular the start of two phase 2 trials with MOR208 in 2016. R&D expenses mainly consisted of costs for external laboratory services and personnel costs. General and administrative expenses decreased slightly to EUR 10.3 million (9-months 2015: EUR 10.6 million).

Earnings before interest and taxes (EBIT) amounted to EUR -32.3 million (9-months 2015: EUR 34.7 million). Adjusted for the one-off effect in 2015 amounting to EUR 59 million, the operating loss (EBIT) for the first nine months rose by 33%, mainly due to the increase in R&D activities.

The Proprietary Development segment reported a segment EBIT of EUR -45.5 million (9-months 2015: EUR 26.5 million), while Partnered Discovery showed a nine months segment EBIT of EUR 22.8 million (9-months 2015: EUR 18.1 million). Proprietary R&D expenses including technology development amounted to EUR 46.2 million, the comparative figure for 9-months 2015 was EUR 39.9 million.

On September 30, 2016, the Group’s liquidity position amounted to EUR 267.2 million compared to EUR 298.4 million on December 31, 2015. The Company’s liquidity is reflected in the balance sheet items "cash and cash equivalents", "available-for-sale financial assets", "bonds, available-for-sale" and current and non-current "financial assets classified as loans and receivables". The decline in liquidity was mainly the result of the use of cash for operations in the first nine months of 2016 and the repurchase of shares for the Group’s long-term incentive program.

Financial guidance for 2016

MorphoSys re-confirmed its guidance for 2016. MorphoSys anticipates total Group revenues in the range of EUR 47 million to EUR 52 million and expects EBIT to be in the range of EUR -58 million to EUR -68 million. Proprietary R&D expenses are expected to rise to EUR 76 million to EUR 83 million. This guidance does not include any potential in-licensing or co-development of additional development candidates.